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HR MATTERS E-TIPS
THIS WEEK'S E-TIP: Preventing Discrimination Claims After Layoffs
Published by Personnel Policy Service, Inc.
"Your Policy and Compliance Experts Since 1972"
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THIS WEEK'S E-TIP: Preventing Discrimination Claims After Layoffs
Even as the economy remains stable, layoffs are still a fact of doing
business. Unfortunately, just as common are lawsuits by terminated
employees. See how you can reduce the chances of litigation and
enhance your position if legal action is unavoidable. |
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THIS WEEK'S E-TIP: Preventing Discrimination Claims After Layoffs
Layoff decisions are painful enough without the added difficulty of
having
to justify your actions in court. Still, reductions in force do
create fertile
conditions for a number of different legal actions by employees who
feel
unfairly targeted. Discrimination claims are at the top of the list.
However, many of these claims can be prevented if you explain and
document the business- and job-related reasons for your decisions.
* Layoff as Age Discrimination *
Age claims are among the most common legal actions generated by
layoffs. The Age Discrimination in Employment Act (ADEA) prohibits
layoff decisions that are made on the basis of age or that adversely
impact employees who are age 40 or older. Therefore, when layoffs
appear to target older employees, they often trigger age
discrimination
claims.
For example, when subjective criteria such as poor performance and
future potential are used to determine who should be laid off and
older
employees are affected, suspicions will naturally arise that age
discrimination is the real motivating factor. Thus, in Thorn v.
Sundstrand
Aerospace Corp., 207 F.3d 383 (7th Cir. 2000), the court decided an
older employee's termination in a reduction in force because of "low
productivity" could have been an excuse for age discrimination. The
evidence showed the employee was the most productive in his
department, his performance evaluations had been lowered, and
younger, less qualified employees were retained.
However, the use of age-related factors in considering employees for
a
layoff generally is not discrimination. In fact, the Supreme Court
ruled in
Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), that reliance on a
factor other than age, such as seniority, salary, or pension status,
does
not violate the ADEA merely because that factor is correlated with
age.
However, if you use one of these factors in an attempt to target
older
workers, you can violate the law.
* Pretext Claims *
Another common type of layoff discrimination claim is based upon
"pretext." This situation arises when a reduction in force is not
the real
reason for termination, but merely a convenient excuse to eliminate
certain employees. A court or jury will likely rule in favor of the
employee
if it determines false reasons were given and that the real reason
for the
layoff was discrimination. The following cases illustrate how a
layoff may
be viewed as a pretext for discrimination:
-- In Juarez v. ACS Gov't Solutions Group, Inc., 314 F.3d 1243
(10th Cir. 2003), the Tenth Circuit affirmed a compensatory and
punitive
damage award to a Hispanic computer operator terminated in a RIF. In
reaching its decision, the court cited evidence that the terminated
employee had received consistently high scores in past performance
evaluations. In contrast, the employer retained non-Hispanic
computer
operators, some of whom had less experience or tenure, had poorer
performance histories, were frequently tardy or absent, and slept or
drank on the job. Therefore, the court determined that the jury
reasonably concluded that the employer's stated reasons for
termination
were pretextual.
-- In Gordon-Howell v. Penn-Plax, Inc., 232 F. Supp.2d 1251 (D.
Kan. 2002), the court allowed the pregnancy discrimination claim of
an
employee terminated in the same week that she informed her employer
of her pregnancy because there was evidence that the employer's
stated
reasons (her location and high expenses) were pretextual. She was
never asked to relocate and her sales territory was the most
profitable in
the company.
An employer is less vulnerable to legal claims if, instead of
orchestrating
a sham layoff or reorganization, it deals with employee performance
problems honestly, consistently, and objectively. Furthermore,
employers may be able to defeat pretext claims if they can
demonstrate
the legitimate business-related or job-related reasons for their
actions.
The following cases illustrate these points:
-- In Groves v. Cost Planning and Mgmt. Int'l, Inc., 372 F.3d 1008
(8th Cir. 2004), the court found that an employee terminated in a
RIF
shortly after disclosing her pregnancy had no discrimination claim.
She
could not show that the reasons the employer gave, i.e., that a
business
downturn required staff cuts and that it selected her based on
factors
including seniority, productivity, project load, and flexibility,
were pretext
for gender or pregnancy bias.
-- In Balderston v. Fairbanks Morse Engine Div. of Coltec Indus.,
328 F.3d 309 (7th Cir. 2003), the court determined that the decision
to
lay off a 59-year-old employee was not a pretext for age
discrimination
because the employee's manager based his choice in part on
performance problems and incorrect data that showed a $1 million
earnings shortfall in the employee's division. The court pointed out
that
the supervisor did not have to be correct in his assessment, only
truthful
in his reason for the termination. |
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You
could be at risk.
Download Layoff & Recall Policy. This policy
provides information regarding selection for layoff, mass layoff and
the WARN Act, and recall requirements.
Topics in this policy
include:
·
Need for a Layoff and Recall Policy
· Alternatives to Layoffs
· Documenting Layoff Decisions
· Pre-Layoff Communications
·
Employment-At-Will and Layoffs
· Temporary and Part-Time Employees
· Selection Criteria for Layoffs
· RIF Committees
· Time on Recall List
· Communications During Layoffs
· Return to Work
· Vacation
· Other Benefits
·
Legal Liability and Layoffs
· Pretext
· Layoffs and Employees on Leave
· Evaluating Employees for Layoff
· Notification of Mass Layoff and Plant Closing
· Recalls
· ERISA and Vacation Pay
·
Continuation of Benefits Under COBRA
Don't wait, download your Layoff &
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Download your Layoff &
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* Base Layoff Decisions on Business- and Job-Related Factors *
Layoff decisions are more likely to prompt legal claims if you make
them
without definite guidelines or base them on subjective criteria. By
the
same token, you are in better shape to defend the layoff when you
can
show you made the selections on the basis of poor work performance,
for instance, or because of business or economic considerations.
Documentation of your approach is particularly important when the
affected employees are in legally protected classes. Here are some
examples where employers successfully defended their decisions:
-- The court determined that the reasons offered by the employer
for its layoff decision (that the employee was terminated as part of
its
restructuring efforts at a time of financial difficulty) appeared to
be based
on sufficient facts to justify its decision and so defeated the
employee's
age discrimination claim, in Schuster v. Lucent Technologies, Inc.,
327
F.3d 569 (7th Cir. 2003).
-- The employer demonstrated that an older employee's
termination in a RIF resulted from economic necessity, the
reorganization of the employee's department, and her score in a
Layoff
Determination Comparison Matrix that was based upon specific
objective
factors, thus proving that she would have been laid off regardless
of
whether age was a factor, in Steger v. Gen. Elec. Co., 318 F.3d 1066
(11th Cir. 2003).
These cases underscore the importance of having clear business
justifications for layoff decisions, of using legitimate
nondiscriminatory
criteria in the process, and of documenting both. In addition, if
you use
performance as a selection criterion, make sure that any past
problems
have been well documented and that your evaluations have been fair
and objective. Your careful attention to detail and appearances will
help
deter litigation and leave you better prepared to defend your
actions, if
challenged. |
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Subscribers to the
Personnel
Policy Manual and
HR Policy
Answers on
CD can find a model layoff policy and more information on
layoffs, in
Layoff and Recall, Chapter 210
Not a subscriber? If you would like to order one of our policy
chapters,
go to:
http://www.hrpolicyanswers.com.
If you have any questions, please call us at 1-800-437-3735. We'll
be
happy to help you. |
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Information provided in HR Matters E-Tips is researched and reviewed
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